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Fujitsu buyout of Siemens stake is 'imminent'

Maybe next week

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Fujitsu may buy out the Siemens half share in their Fujitsu Siemens Computers (FSC) joint-venture for half a billion dollars and sell off the PC and retail side of the business to Lenovo.

According to a Bloomberg report a sum of 50-60 billion yen is involved, with a possible announcement next week. Siemens is known to want to take its FSC JV capital and invest it more profitably elsewhere.

Fujitsu would gain a solidified foothold in Europe, proprietary BS2000 mainframe, SPARC and industry-standard server lines, plus FibreCAT drive array products, a storage relationship with EMC plus a strong CentricStor virtual tape library (VTL) business and six-month-old CentricStor clustered filer product line. It would also gain a PC and notebook business which it is thought not to want.

FSC has a 4,000-strong international services arm, with annual revenues of around €1bn ($788.3m), which looks to be a strong selling point for Siemens.

The server business would help Fujitsu counter four years of declining server sales in Japan. In the EMEA market (Europe, Middle East and Africa) FSC is fourth behind HP, Dell and IBM. Fujitsu is the server market leader in Japan with a fifth of the market, closely followed by IBM and HP. (These rankings come from IDC.)

FSC was founded on October 1, 1999, and employs 10,500 people. It had sales of €6.61bn ($5.2bn) in its last financial year, which ended on March 31. It earned just €105m profit ($82.8m), 1.6 per cent of its revenues. You can see why Siemens CEO Peter Loescher thinks he can make more money elsewhere.

A Fujitsu spokesperson talked of making positive steps forward but no agreement has yet been reached. FSC has declined to comment.

Selling the PC and notebook business would defray the purchase cost for Fujitsu. Lenovo has been mooted in the German press as its acquirer.

The immediate effect for FSC would be a reporting change for CEO Bernd Bischoff to a Fujitsu person and the potential lopping off of the PC and notebook business. Whether FSC will continue as an independent though differently-branded entity or be integrated into Fujitsu is unclear. Integration is almost certainly to be the medium to long-term goal, however.

This week, FSC told the UK channel that it was raising hardware prices, with effect from November 1. The company blamed the rise of the dollar, as did Dell, Acer and HP for their price rises at the start of the month. ®